Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (January 2016)
32 slides from Select Medical's investor presentation, Jan 11, 2016
Slide 1: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements based on current management expectations. Numerous factors, including those related to market conditions and those detailed from time-to-time in the Company’s filings with the Securities and Exchange Commission, may
Slide 2: Select Medical Overview
Headquartered in Mechanicsburg, Pennsylvania, Select Medical employs approximately 40,900 staff in the United States. SCALE AND EXPERTISE Leading provider of post-acute services with operations in 46 states and D.C. $3.5 Billion Net Revenue LTM Q3 2015 $377 Million Adjusted EBITDA LTM Q3 2015(1) 10.
Slide 3: Select Medical's National Footprint
Select Medical’s National Footprint 110 Long-Term Acute Care Hospitals (LTACH) (28 States) 17 Inpatient Rehabilitation Hospitals (8 States) 1,033 Outpatient Rehabilitation Centers (31 States and D.C.) 415 Contract Therapy Locations (28 States and D.C.) 300 Concentra Centers (38 States) 4 3 3 12 2 7
Slide 4: Strategy
Strategy Be the “preferred” provider of post acute care services in our markets Structured relationships to align with patients Partner with academic/major medical institutions Hospital in hospital model in LTACH Experts in our fields – LTACH, Inpatient Rehab, Outpatient Rehab and Occupational Medic
Slide 5: Long-Term Acute Care Specialty Hospitals
Long-Term Acute Care Specialty Hospitals
Slide 6: Select Medical LTAC Hospitals
3 2 2 1 1 2 2 2 9 2 3 3 11 5 15 9 1 1 1 3 2 5 2 6 1 5 1 10 Select Medical LTAC Hospitals 7 110 Long-Term Acute Care Hospitals (LTACH) (28 States) As of 9/30/15
Slide 7: LTACH Overview
LTACH Overview Major provider of LTACH services in U.S. 110 hospitals 80 hospital-in-hospital (2,885 beds); average size 36 beds 29 freestanding (1,601 beds); average size 55 beds 1 managed hospital Ownership of freestanding LTACHs 17 owned 12 leased 8
Slide 8: LTACH Legislation
LTACH Legislation LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 LTACH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTACH Other patients receive “site neutra
Slide 9: Patient Criteria Phase-In
Patient Criteria Phase-In 11 HOSPITALS MOVING TO CRITERIA >>> Note: Hospitals as of 9/30/15 2015 2016 36 HOSPITALS 1,567 BEDS Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ‘16 17 HOSPITALS 753 BEDS 37 HOSPITALS 1,343 BEDS 19 HOSPITALS 823 BEDS
Slide 10: Status of LTACHs in Criteria – Q4 '15
Status of LTACHs in Criteria – Q4 ‘15 Number of Hospitals: 16 Post criteria hospitals equal to or above pre-criteria census: 12 Post criteria hospitals below pre-criteria census: 4 % change in census from pre-criteria to post-criteria: (3.4%) Change in ADC from pre-criteria to post-criteria: (18.5)
Slide 11: Inpatient Rehabilitation Specialty Hospitals
Inpatient Rehabilitation Specialty Hospitals
Slide 12: Inpatient Rehabilitation Hospitals
Acquired Kessler Institute in September 2003 The Kessler Rehabilitation network: Three freestanding inpatient rehab hospitals (336 total beds) 88 outpatient rehab clinics Largest licensed rehab hospital in U.S. U.S. News & World Report has recognized Kessler Institute as one of the nation’s best in
Slide 13: Operational Joint Ventures
Operational Joint Ventures Consolidated Joint Ventures: Non-Consolidating Joint Ventures: Dallas, TX 4 IRFs (220 beds) 2 managed units (33 beds) 52 outpatient clinics Scottsdale, AZ 50 bed IRF Columbus, OH 44 bed IRF Atlanta, GA 56 bed IRF 22 outpatient clinics Hershey, PA 76 bed IRF 22 bed TCU St.
Slide 14: JVs Under Construction
JVs Under Construction Los Angeles, CA 138 bed IRF (opening early 2016) Cincinnati, OH 60 bed IRF (opening Q2 2016) Currently managing 2 units with 46 total beds New Orleans, LA 60 bed IRF (opening Q4 2016) Currently managing 1unit with 29 total beds 16
Slide 15: Growing Rehabilitation Network
Growing Rehabilitation Network Partner in joint ventures with premier acute care hospitals and systems to build post acute networks 17
Slide 16: Specialty Hospitals Poised for Growth
Specialty Hospitals Poised for Growth LTACH REHAB 2014 2015 2016 2 new LTACHs 1 new LTACH 3 new LTACHs 1 new LTACH 1 new LTACH Begin phase-in of LTACH patient criteria 18
Slide 17: Outpatient Rehabilitation
Outpatient Rehab Clinics Outpatient Rehabilitation
Slide 18: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry 1,033 Outpatient Rehabilitation Clinics (31 States and D.C.) Source: Company public filings and websites as of Sept. 30, 2015 Select (1,033) PhysioTherapy Associates (560) USPH (506) ATI (475) 12 7 7 13 2 17 24 15 20 93 1 66 10 46 17 59 8 45 152 2 21 2 21 32 45 1
Slide 19: Outpatient Rehab Clinics
Outpatient Rehab Clinics 42% 13% 22% 23% 21 YEAR 2010 2011 2012 2013 2014 VISITS (000’s) REVENUE PER VISIT $101 4,567 $103 4,470 $103 4,569 $104 4,781 $103 4,971 LTM Q3 ‘15 $103 5,146 CAGR 3.2%
Slide 20: 2015 Outpatient Initiatives
2015 Outpatient Initiatives Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select Payors/Employers Expand hand therapy services to more clinics Expand concussion management program Continued development of start-up clinics 22
Slide 21: 2015 Outpatient Initiatives
2015 Outpatient Initiatives se... MEDICAL * Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select * Payors/Employers * Expand hand therapy services to more clinics * Expand concussion management program * Continued development of start-up clinics
Slide 22: Concentra acquired 6/01/15
Concentra acquired 6/01/15 Concentra is the leading provider of occupational health with 475 locations across 43 states $1.0 billion of revenues and $98.4 million of Adjusted EBITDA for 12 months ending 9/30/15 Service lines: Centers: 300 occupational health locations, with some consumer health Onsi
Slide 23: Post-Acquisition Update
Post-Acquisition Update Management transition Earnings June – September 2015 Revenue = $345.8M Adjusted EBITDA = $36.8M Adjusted EBITDA margin = 10.6% Identification of $36 million of cost saving synergies 25
Slide 24: Post-Acquisition Update
' isiti F | Post-Acquisition Update Select * Management transition * Earnings June — September 2015 — Revenue = $345.8M — Adjusted EBITDA = $36.8M — Adjusted EBITDA margin = 10.6% * Identification of $36 million of cost saving synergies
Slide 25: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA CAGR 8.2% CAGR 4.4% $2,390 $2,805 $2,949 $2,976 $3,065 $307 $386 $406 $373 $364 ($ in millions) ($ in millions) 27 $3,475 $377 2010 2011 2012 2013 2014 LTM Q3 2015 Hospitals Outpatient Concentra 2010 2011 2012 2013 2014 LTM Q3 2015 Hospitals Outpat
Slide 26: Annual Capital Expenditures
Annual Capital Expenditures Accelerated development spending expected 2014-2015 $52 $46 $68 $74 $136 28 $95 ($ in millions) $0 $25 $50 $75 $100 $125 $150 2010 2011 2012 2013 2014 LTM Q3 '15 Maintenance Development
Slide 27: Free Cash Flow
Free Cash Flow Focus on Free Cash Flow Generation ($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment See Slide 33 for non-GAAP reconciliation 29 $93 $171 $231 $119 $75 $86 2010 2011 2012 2013 2014 LTM Q3 '15
Slide 28: Financial Policy
Financial Policy 30 Highly accretive upon execution of synergies Only in existing and related businesses Execution of put / call to begin end of FY18 (max 33.3% per year) Board decision but none for the foreseeable future MINORITY EQUITY IN CONCENTRA DIVIDENDS USE OF CAPITAL (OPPORTUNISTIC) ACQUISIT
Slide 29: Appendix: Additional Materials
Appendix: Additional Materials
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) 33 2010 2011 2012 2013 2014 Q3 ’14 YTD Q3 ’15 YTD LTM Q3 ’15 Net Income $82 $113 $154 $123 $128 $100 $110 $138 (+) Income tax 42 71 90 75 76 64 65 77 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries 1 (3) (8) (2) (7) (4) (13) (16) (+/-) Other e
Slide 31: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 32: Improving Quality of Life
z . MEDICAL = Improving Quality of Life selectmedical.com/investor-relations/for-investors
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